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The Competition Law of India, the journey to eliminate negative competition from the Indian market

On 13th January 2003, the parliament of India passed the Competition Act, 2002, repealing the Monopolies and Restrictive Trade Practices Act, 1969, with the goal of ensuring that the functioning of the market structure did not result in the concentration of the economy in a few hands. The competition act also prohibited monopolistic and discriminatory acts that are harmful to the public at large.

When in 1991, economic liberalization was introduced, Indian markets faced a major turning point, as they got an access to the outside world. The liberalization eliminated trade barriers and the nation began to face competition from both within and beyond the country. To enhance globalization, India went on to introduce the NEPs (New Economic Policy), reduced government interference, and started opening opportunities for industry and international investments. Among the changes introduced, several eliminations were made in the MRTP Act. For instance, the elimination of the mandatory pre-entry examination of investment made by industries categorized under the MRTP act, elimination of mergers, acquisitions and combination and also elimination of precondition of government permission for spreading and forming new enterprises. Following the introduction of these policies in 1991, the government held it essential to introduce a competition law system which was more relevant to domestic economic forces and compatible with international practices. Coming into force on 31st march, 2003, the competition act’s primary goal was to control the anti-competitive behavior of a firm or company that has a negative impact on competition in India’s market. since its enactment, the act has been changed twice, with the Competition (Amendment) Act, 2007 and the Competition (Amendment) Act, 2009.

The Indian parliament enacted the Competition Act in 2002 to govern the anti-competitive behavior of firms in the Indian market. The goal was to develop and preserve and open, just, competitive as well as a creative environment that will protect the interest of consumers and foster long-term economic progress in the nation. In 2007, the act was amended, which came into effect on 20th May, 2009, when the Indian government notified some sections of the competition act relating to anti-competitive agreements and abuse of dominant positions.

Currently, the Indian parliament is aiming to bring amendments to the India’s competition law. This will be their introduction to the Competition Amendment Bill (Bill 2023). Amongst the changes being proposed it has been held that the Competition Commission of India, which is the chief national competition regulator of India, can now impose penalties up to 10% of the total global turnover of enterprises derived from all the products and services, if they are found to have contravened the competition law. Under the current law, penalties are calculated as a percentage of only the “relevant turnover” in India.

Along with this, the competition act bill 2022 had proposed a new “deal value” threshold, under which any transaction having a deal value of more than INR 2,000 crore would require an approval from the CCI if the parties to the transaction had substantial business operations in India. The proposed amendment aims to limit this requirement of substantial business operations in India to the target entity.

Furthermore, the competition act (bill) 2022 had proposed to introduce Section 48A for a settlement mechanism for a charged party to engage in settlement negotiations with the CCI after the Director General had submitted its investigation report. Separately, Section 53N of the Competition Act allows aggrieved parties to approach the appellate tribunal to recover compensation for damages suffered. While the act of 2022 did not explicitly allow aggrieved parties to file compensation claims after settlement orders by the CCI, the amendment of 2023, in line with the suggestions of the Standing Committee, clarifies whether such claims will be allowed or not.

The powers of a Director General will also be defined under the new amendment. While earlier, as per the Competition Act 2022, the Director General would be granted powers to examine agents such as the bankers, auditors and legal advisors of a company, during the time of appointment, the Competition Act 2023 will propose to restrict the applicability of the said provision to the legal advisors employed by the parties to the investigation.

If we form a conclusion, it can certainly be said that the proposition of rendering “global turnover” as the premise for calculation of penalty is definitely a surprising move. This proposed amendment is undergoing a consultative process in the court. Apart from this, several proposals have also been rejected under the Competition Act 2023. This includes the recommendations made by the standing committee relating to the deposit of 25% of the penalty amount for filing of a statutory appeal. With the undergoing discussion being held in the parliament, we can expect the newly amended competition law, 2023 to grace the market in the summer of this year.




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